Litigation: Sanctions for spoliation of evidence

Spoliation of evidence occurs when an individual or entity violates its duty to preserve relevant evidence. A finding of spoliation will often result in the imposition of sanctions and can significantly impact a litigation. Understanding how courts determine the appropriate spoliation sanction to impose is essential when this issue arises.

Courts have two sources of authority for sanctioning spoliation of evidence. Under the rules of civil procedure, courts have broad discretion to impose a variety of sanctions against a party that fails to produce evidence in violation of the civil rules. The primary limitation on this authority is that the discovery rules apply only to acts of spoliation that occur during the pendency of a lawsuit or following a court order. Courts also rely upon their inherent power to control the administration of justice to sanction pre-litigation spoliation. This authority allows courts to preserve their independence and integrity, since the destruction of evidence inhibits a court’s ability to hear evidence and accurately determine the facts.

Courts have significant latitude in deciding the appropriate discovery sanction. While there is no rigid test for this determination, the choice of sanctions will usually be guided by the “concept of proportionality” between the offense and the sanction. So, courts generally balance several factors to ascertain the appropriate sanction, including: the culpability of the spoliating party; the prejudice to the nonoffending party; the degree of interference with the judicial process; whether lesser sanctions will remedy the harm and deter future spoliation; whether evidence has been irretrievably lost; whether there was an obligation to preserve the evidence; the practical relevance or importance of the evidence; the potential for abuse; and whether sanctions will unfairly punish a party for attorney misconduct. Courts generally select the least onerous sanction corresponding to the willfulness of the destruction and the resulting prejudice.

While courts may consider many factors, the two most important factors in assessing spoliation sanctions are the culpability of the offender and the degree of resulting prejudice from the conduct. Considering culpability, courts assess the mental state of the actor along a continuum of fault ranging from accidental or inadvertent, to considerably more blameworthy, to knowing and purposeful. Generally, a dispositive sanction may be imposed only when the spoliation results from willfulness or bad faith. Where there is intentional conduct, the court can assume that the evidence would have damaged the spoliator’s case and impose sanctions accordingly. But in certain circumstances cases involving repeated unintentional conduct (i.e., gross negligence) may be met with a more severe sanction than a single act of bad faith.

The selection of an appropriate sanction must be balanced with the degree of resulting prejudice caused by the spoliation. As with culpability, prejudice can range from serious to modest to nonexistent. Therefore, a court must consider the materiality of the destroyed evidence and the victim’s ability to fully prepare its case.

Once a court decides to award sanctions, a variety of potential sanctions exist. First, courts have long employed the adverse inference jury instruction or “spoliation inference,” to sanction spoliation of evidence. Under this inference, the jury is instructed that it may assume that the lost evidence, if available, would have been unfavorable to the spoliator. Courts are divided on the level of culpability required for an adverse inference. Some courts require a showing of intent because the inference presupposes that a consciousness of wrongdoing motivated the spoliation. Consequently, giving the instruction only makes sense if there was an intent to destroy evidence. Other courts find negligence sufficient, reasoning that the need to deter and punish spoliation is a sufficient basis for giving an adverse instruction. These courts consider it inappropriate to require the aggrieved party to bear the onerous burden of proving the spoliator’s fraudulent intent.

Second, courts may refuse to permit a spoliator to introduce expert, or other testimony, regarding either the missing or destroyed evidence as a sanction. Excluding expert or other testimony may result in summary judgment against the spoliator because, without that testimony, the party cannot prove its case.

Third, dismissal and default judgment are the harshest spoliation sanctions. Given their severity and the presumption that cases should be decided on the merits, these sanctions are rarely imposed. Courts generally employ the sanction of dismissal where a party demonstrates bad faith or prejudice so severe that no other remedy will suffice.

Finally, the imposition of monetary sanctions is becoming more common in the context of spoliation of electronically stored information. Courts have sanctioned spoliation by awarding attorneys’ fees, fines and punitive damages.

Any imposition of spoliation sanctions can be significant. While understanding when the duty to preserve arises and the scope of what must be preserved is important, there are other actions that a company may take to avoid the imposition of sanctions for destruction of evidence. These include: offering adverse parties or likely adverse parties an opportunity to inspect any physical object in its post-accident condition; creating a photographic or video record of the evidence if it is necessary to discard or destroy physical evidence before a potential opponent has had an opportunity to inspect it; taking all reasonable steps to locate and preserve missing evidence, including tracing it to third parties; and knowing the applicable law regarding spoliation of evidence.

In certain circumstances, even the best efforts and intentions will still result in a finding that spoliation occurred. While the potential impact of such a finding cannot be ignored, remember that courts will closely scrutinize the conduct of the spoliator. Accordingly, evidence of good faith and reasonable attempts to comply with your duty to preserve, including a thorough and well-planned litigation hold sent to all custodians, including third parties like cloud service providers can afford a company with a valid and successful defense or at least reduce the severity and overall impact of the spoliation sanctions.